China’s ZTE, Huawei Step Up Smartphone Specs

Consumers don’t usually associate cutting-edge specs with Chinese smartphone brands, but new handsets hitting the market could spell a change in that mindset.

Smartphones from Chinese companies like ZTE Corp. and Huawei Technologies Co. may be cheaper than Apple Inc.’s iPhone or Samsung Electronics Co.’s high-end Galaxy models, but that doesn’t necessarily mean that they are less advanced.

ZTE’s newest offering is a “phablet”, or a smartphone with a screen almost as large as some tablets, called the Grand Memo. It comes with a 5.7-inch high-definition screen Qualcomm Inc.’s newest Snapdragon 800 processor and a 13-megapixel camera. It will start selling in the second quarter.

The Grand Memo’s 13-megapixel camera matches – at least in terms of megapixels – Sony Corp.’s recently launched Xperia Z smartphone, which comes with a camera using the Japanese company’s own image sensor. The iPhone 5 has an eight-megapixel camera. More megapixels don’t necessarily mean better image quality, which is determined by multiple factors.

ZTE is not the only Chinese handset maker stepping up its hardware. At the Mobile World Congress this week in Barcelona, ZTE’s larger rival Huawei Technologies Co. announced its Ascend P2 smartphone, which the company claims is the fastest Long Term Evolution device on the market.

“Chinese companies are no laggards when it comes to using cutting-edge technologies for smartphone screens,” said Japan Display Inc. Chief Executive Shuichi Otsuka in a recent interview with The Wall Street Journal. Japan Display, which doesn’t disclose its client names, supplies screens to many handset makers including Apple HTC Corp. and Huawei, according to people working in the component industry.

Still, analysts say it won’t be easy for the Chinese players to expand in the higher-end smartphone market, where purchase decisions are often swayed by the brand image rather than specific hardware features. ZTE and Huawei, whose main businesses are supplying telecommunication equipment to mobile carriers, are not widely recognized as consumer brands, particularly outside China. Aside from hardware, the experience of using a smartphone is also dependent on its operating system, user interface and applications.

Both ZTE and Huawei see robust demand in China, which has already overtaken the U.S. as the world’s largest smartphone market. But price competition is intensifying among local handset makers offering inexpensive smartphones, and ZTE and Huawei have been trying to offer more advanced models they can sell at higher prices, while also trying to launch such high-end models in overseas markets.